Nevada State Development Corporation, the state’s largest SBA 504 loan provider, is excited to announce that SBA now has a new 25-year 504 loan option to better meet the needs of some small business borrowers.

The new 25-year loan program, which complements the existing 10- and 20-year options, is designed to make it easier than ever for borrowers to reach their goals. All three terms available offer fixed, below-market interest rates.

“The new 25-year option, which we have just added to our terms available under the U.S. Small Business Administration’s 504 loan program, promises to be an ideal solution for some of our borrowers,” said Evan Dickson, president of Nevada State Development Corporation. “Business owners who opt for the 25-year program will typically see savings of thousands of dollars a year on their payments, which means increased cash flow for the small business. With more cash on hand, business owners can focus on expansion, acquisitions, payroll, adding more staff, enhancing client services, or whatever their particular needs may be.”

As an illustration, consider the distinctions between the total payments a business would encounter on a $1 million project under a 20-year loan versus a 25-year loan, assuming a 10 percent down payment, which is common for SBA 504 loans.

With a 20-year loan, the monthly payment on the SBA portion of the package would amount to $2,628.79, based on 20-year amortization at 4.95 percent on $400,000, or 40 percent of the finance package. Payment on the bank portion would amount to $3,070.44, based on 25-year amortization at 5.50 percent on $500,000, or 50 percent of the finance package. So the business’s total monthly payment would come to $5,699.23.

However, under the 25-year option, the monthly payment on the SBA portion would amount to $2,326.72, based on a 25-year amortization at 4.95 percent on $400,000, while the bank portion would remain the same.

The final result is total monthly payment of $5,397.16 under the 25-year program for the hypothetical $1 million project — a savings for the business owner of $302.07 per month.

The new 25-year option conforms to the standards of traditional SBA 504 loans. Business owners may use it for real estate purchases, including land or buildings; improvements to existing buildings; or the purchase of equipment. It offers a fixed, below-market interest rate. Down payments are as low as 10 percent.

SBA 504 loans of 10 or 20 years remain available for businesses that prefer a loan with a shorter maturity.